- Depreciates another 1.02% in inter-bank market
- This is the rupee's ninth successive fall, brings cumulative decline to 6.7% in less than two weeks
Pakistan's rupee continued to sustain losses against the US dollar for the ninth successive session, settling with a depreciation of 1.02% in the inter-bank on Tuesday, as the dollar strengthened globally while investors remained wary of a rising import bill.
As per the State Bank of Pakistan (SBP), the rupee closed at 234.32 after declining by Rs2.4. During the last nine trading sessions, the rupee has cumulatively declined by Rs15.72 or 6.7% against the US dollar.
On Tuesday, Pakistan's rupee had sustained losses against the US dollar for the eighth successive session, settling with a depreciation of 0.91% at 231.92 in the inter-bank market as investors remained concerned over the trade gap in the coming months.
The rupee has been under renewed pressure against the US dollar this month. Market experts believe this is primarily due to the strengthening US dollar index, alongside a rise in import of food-related items.
“The recent movement in rupee is not something out of the blue — it comes in the backdrop of dollar gaining strength globally,” Wajid Rizvi, Head of Research at Inter-market Securities, told Business Recorder.
The analyst said market players await funding from friendly countries, which has not come to fruition yet.
“Despite the recent drop, oil prices continue to remain range-bound, giving no solace for the oil-importing South Asian country. Respite will only come if oil drops below $80 per barrel, otherwise, import pressure would keep the rupee on the backfoot,” said Rizvi.
"Spread in rates between the open-market and inter-bank has also widened, which will keep the liquidity position tight in the inter-bank."
He added that the government measures taken in reducing non-essential imports might not be enough.
At the same time, the government has said that a string of policy measures will be introduced in the coming days, which Federal Minister for Finance Miftah Ismail believes will stabilise the currency market. They have yet to be announced.
Moreover, in a major development, the State Bank of Pakistan (SBP) on Tuesday suspended with immediate effect the authorisation of two Exchange Companies due to violation of regulatory instructions.
In a statement, it notified the suspension of Swiss International Exchange Company-B (Pvt.) Limited and Great Union Exchange Company-B (Pvt.) Limited for three months due to "serious violations of regulatory instructions".
Internationally, the dollar index, which measures the currency against six major peers including the yen, euro, and sterling, was little changed at 109.77, after surging 1.5% overnight, its biggest one-day percentage gain since March 2020.
The gain comes amid a jump in US yields after hotter-than-expected inflation boosted bets for even more aggressive monetary tightening by the Federal Reserve next week.
Meanwhile, oil prices, a key determinant of currency parity, inched lower on Wednesday on concerns of another US Federal Reserve interest rate hike next week after consumer prices unexpectedly rose in August, outweighing support from a robust OPEC oil demand growth forecast.
Inter-bank market rates for dollar on Wednesday
BID Rs 234.50
OFFER Rs 235.50
In the open market, the PKR lost 2 rupees for buying and one rupee for selling against USD, closing at 238 and 239, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 240 and 242 respectively.
Against UAE Dirham, the PKR remained unchanged for both buying and selling, closing at 66.50 and 67, respectively.
Against Saudi Riyal, the PKR gained 70 paisas for buying and 80 paisas for selling, closing at 63and 63.40, respectively.
Open-market rates for dollar on Wednesday
BID Rs 238
OFFER Rs 239